NiSource Inc.

ticker: NI step: 01 generated: 2026-05-13 source: quick-research

NiSource Inc. (NI) — Business Overview

Business Description

NiSource is a regulated gas and electric utility serving approximately 3.8 million customers across six states (Indiana, Kentucky, Maryland, Massachusetts, Ohio, and Pennsylvania) through two primary operating brands: Columbia Gas (natural gas distribution) and NIPSCO (Northern Indiana Public Service Company — electric and gas in Indiana). With ~$28B in planned capital investment from 2026–2030, NiSource is in active transformation, pivoting NIPSCO from coal generation toward renewables while capitalizing on a massive data center load opportunity anchored by Amazon (2,800 MW by 2032) and Alphabet.

Revenue Model

As a regulated utility, NiSource earns returns on capital through rates set by state public utility commissions in 6 states and FERC for transmission. The Gas Distribution Operations segment (~50% of operating earnings) earns stable returns on natural gas infrastructure across the Midwest and Mid-Atlantic. The Electric Operations segment (NIPSCO, ~50%) includes integrated generation, transmission, and distribution in Indiana. NiSource is transitioning out of coal generation and into contracted renewable power purchase agreements and new gas generation to serve surging data center demand.

Products & Services

• Natural gas distribution — local delivery of natural gas to residential, commercial, and industrial customers via Columbia Gas brands in 5 states
• Electric generation, T&D — NIPSCO owns and operates electric generation (transitioning from coal to renewables) and the transmission/distribution network in northern Indiana
• Data center power supply — contracted capacity agreements with Amazon (2,800 MW by 2032) and Alphabet for dedicated power supply to hyperscale data centers in Indiana
• Renewable energy development — wind, solar, and battery storage under Indiana's Integrated Resource Plan

Customer Base & Go-to-Market

NiSource serves ~3.3 million natural gas customers and ~500,000 electric customers in captive regulated service territories. The transformational new customer class is hyperscale data centers: Amazon's expanded commitment to 2,800 MW by 2032 represents a step-change in NIPSCO's load profile. Indiana's relatively low electricity costs and land availability make it an attractive data center location.

Competitive Position

NiSource is a regulated monopoly in its service territories with no direct utility competition. It competes for capital allocation against other regulated utility peers. The Indiana data center franchise is a unique differentiator — few Midwest utilities have locked in anchor hyperscaler customers of Amazon/Alphabet's scale, providing unusual visibility into multi-decade load growth.

Key Facts

• Founded: 1912 (Northern Indiana Public Service Company predecessor)
• Headquarters: Merrillville, Indiana
• Employees: ~7,800
• Exchange: NYSE
• Sector / Industry: Utilities / Multi-Utilities
• Market Cap: ~$22B (at ~$47/share, ~475M shares)

ticker: NI step: 04 generated: 2026-05-13 source: quick-research

NiSource Inc. (NI) — Financial Snapshot

Income Statement Summary

FY2025: Revenue $6.642B (+21.8% — Amazon/data center agreements recognized); adj. EPS $1.90 (+9%)

Cash Flow & Balance Sheet (FY2024)

Note: Negative FCF is standard for utilities in high-growth capex cycles; dividend is funded from operating cash flow.

Key Ratios (approximate)

• P/E: ~25x (adj.) | EV/EBITDA: ~13x | Dividend Yield: ~2.5%
• Adj. EPS CAGR (2026–2033): 8–9% target | Rate Base CAGR: 9–11%

Growth Profile

NiSource has delivered consistent 8–10% adj. EPS growth driven by infrastructure investment and rate base expansion. FY2025's 21.8% revenue jump reflects the recognition of Amazon and Alphabet data center capacity agreements. The $28B capital plan for 2026–2030 is one of the largest in the company's history, supporting an 8–9% EPS CAGR through 2033. Q1 2026 EPS beat consensus on data center momentum.

Forward Estimates

• FY2026 adj. EPS: ~$2.06–2.12 (+8–9% target)
• Long-term EPS CAGR: 8–9% through 2033
• Rate base CAGR: 9–11% through 2033
• Amazon capacity commitment: 2,800 MW by 2032
• Additional upside capex: ~$2.2B identified
• Analyst avg. price target: ~$47.30 (essentially at current price)

ticker: NI step: 12 generated: 2026-05-13 source: quick-research

NiSource Inc. (NI) — Investment Catalysts & Risks

Bull Case Drivers

1. Amazon + Alphabet Hyperscaler Anchor = Multi-Decade Load Growth — NiSource's NIPSCO Indiana franchise has secured Amazon's commitment for 2,800 MW of power capacity by 2032 (recently expanded by 400 MW) and a new Alphabet partnership, representing a step-change in electric load growth that most regulated utilities can only dream of. These contracts provide decades of high-load, high-margin electric revenue that underpins NIPSCO's capital investment plan and supports the 8–9% EPS growth trajectory.

2. $28B Capex Plan + 9–11% Rate Base CAGR — NiSource's 2026–2030 capital plan of $28B (with $2.2B in identified upside projects) will compound rate base at 9–11% annually through 2033, translating into 8–9% adj. EPS CAGR. Rate base growth is the most reliable driver of utility earnings — it flows directly to regulated returns once rates are approved. Q1 2026 EPS beat consensus on data center momentum, validating early execution.

3. Indiana Decarbonization + New Gas Generation — NIPSCO is retiring coal (Schahfer and Michigan City plants) and replacing with renewables and new gas-fired generation under Indiana's approved Integrated Resource Plan. Federal mandates and Indiana regulatory support for the transition reduce execution risk, and the new generation investments earn regulated returns on a fast-track basis. The coal retirement reduces fuel cost volatility and ESG-related regulatory risk.

Bear Case Risks

1. Valuation Premium with Stock at/Above DCF Fair Value — NiSource trades at ~$47, essentially at analyst consensus targets, while DCF-based fair value estimates suggest ~$37.50. At ~25x adj. P/E with negative free cash flow (heavy capex), the stock is priced for flawless execution of a long-dated capital plan. Any regulatory setback, data center delay, or interest rate spike could compress the multiple sharply.

2. Coal Plant Retirement Delay + Regulatory Complexity — Federal authorities (NERC/DOE) ordered NIPSCO to keep its R.M. Schahfer coal station operating 90 days past its December 2025 scheduled retirement to support grid reliability amid rising power demand. This complicates NiSource's decarbonization timeline, could delay rate case proceeds from replacement generation, and highlights that utility transformation plans are subject to external regulatory override that management cannot control.

3. Interest Coverage and FCF Gap — NiSource's interest payments are not well-covered by earnings, and the dividend is not well-covered by free cash flow given the large capex program. The ~$12B debt load grows with each capital raise to fund the $28B plan. If interest rates remain elevated or capital markets tighten, NiSource's cost of capital increases and the returns on incremental investment thin — a potential self-reinforcing constraint on growth.

Upcoming Events

• Q2 2026: Earnings — data center load ramp update and Alphabet partnership details
• FY2026: 8–9% adj. EPS CAGR validation ($2.06–2.12 target)
• 2026+: Amazon 2,800 MW capacity delivery milestones
• Indiana rate cases: Key for cost recovery on coal retirement replacement generation

Analyst Sentiment

Analyst consensus is constructive: 30% Strong Buy, 50% Buy, 20% Hold. Average 12-month price target ~$47.30 — essentially at the current ~$47.50 price, offering minimal near-term upside from consensus. The bull case is a long-duration story: data center growth and rate base compounding over 5–10 years, not a 12-month re-rating trade.

Research Date

Generated: 2026-05-13